NETHERLANDS LAW AND PRACTICE Contributed by: Jimmie van der Zwaan, Rob Langeveldt, Vasisthà Parmessar, Willem Koeleman and Bart-Jan Paardekooper, Borgen Tax
9.4 Impact of BEPS 2.0 The Netherlands has consistently supported the Pillar One and Pillar Two proposals and contin - ues to support their swift implementation. As of 2024 the Netherlands has implemented the Minimum Tax Act, stipulating that all companies with global revenues exceeding EUR750 million must pay a minimum tax at a 15% effective rate. This is achieved through a top-up tax on profits made in other countries or inclusion in the Dutch tax base of payments that are made to countries if they are not taxed enough. Pillar 1 – Amount B In October 2021, the OECD’s Inclusive Frame - work on BEPS agreed on Amount B to simpli - fy and streamline the application of the arm’s length principle to in-country baseline marketing and distribution activities, with a particular focus on the needs of low-capacity jurisdictions. Fol - lowing that mandate, the report contains guid - ance on “Special considerations for baseline distribution activities” that is incorporated into the OECD Transfer Pricing Guidelines for Mul - tinational Enterprises and Tax Administrations 2022 as an Annex to Chapter IV. The simpli - fied and streamlined approach set out in that guidance is expected to enhance tax certainty and to relieve compliance burdens for taxpay - ers and tax administrations alike, particularly those in low-capacity jurisdictions facing limited resources. Jurisdictions can choose to apply the simplified and streamlined approach to qualifying transac - tions of eligible baseline distributors. The guid - ance in this report sets out the characteristics of in-scope distributors, which cannot, for exam - ple, assume certain economically significant risks or own unique and value intangibles. More - over, certain activities may exclude a distributor
this case law and the new Chapter 10 of the OECD TP Guidelines. The new transfer pricing decree recognises this difference, and it notes that if a taxpayer requests advance certainty on the application of the arm’s length principle, the OECD TP Guidelines will be taken as the start - ing point. New Decree Lastly, a new decree has removed the approved policy to charge only the relevant actual costs in the case of low-value-added services. This is replaced by a brief reference to the OECD TP Guidelines, in which the option to re-charge on a cost basis can still be applied. This prob - ably implies that the DTA will have a less flexible stance on remunerating low-value-added ser - vices on a cost basis. 9.2 Arm’s Length Principle The arm’s length principle is the leading princi - ple for transfer pricing purposes. The principle is also codified in Dutch tax law. There are no circumstances in which another principle would be applicable. In parliamentary history it is stip - ulated that, in the Netherlands, taxable profit is determined on the basis of the arm’s length principle in accordance with the interpretation agreed within the OECD. 9.3 Impact of the Base Erosion and Profit Shifting (BEPS) Project The Dutch interpretation of the arm’s length prin - ciple has not changed significantly following the BEPS project, as indicated in the TP Decree. The documentation standards have, however, become more extensive. The TP team of the DTA has grown over time and there has therefore been an increase of TP audits or questionnaires.
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